Spies, Inc.: Business Innovation from Israel's Masters of Espionage

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Spies, Inc.: Preface Preface I first came across unit 8200 when I wrote a magazine piece chronicling Israel's high-tech boom. It was 2000, and there was a cataclysmic buzz going on about this tiny, defiant nation that had in a very short period of time lept onto the global stage as one of the world's most dynamic technology clusters. At the time, Israeli startups numbered in the thousands, and the country placed third behind the United States and Canada in the number of companies listed on NASDAQ. There was something big going on inside of this small nation. Undeniably, the driving force behind much of this was the Israeli Defense Forces IDF and, in particular, its elite technological units. However, there was one that stood out-unit 8200-and although it had remained in the shadows for decades, it seemed to cast the strongest light over much of the dynamism that was happening in Israel. The IDF plays a wide-ranging and singularly exceptional role in Israel, but there was something fundamentally unique and interesting going on in this secretive intelligence unit that has been compared to the National Security Agency NSA in the United States. While the list of world-class technologies and companies that could trace their lineage to the unit was certainly remarkable in its own right, it appeared to be just a small thread that was part of a longer string. Israel's particular set of geopolitical and historical circumstances had shaped a very distinctive kind of innovative thinking. The military was its most evident expression, and unit 8200 proved to be its most explicit example. This creative entrepreneurial character that had served Israel so well in war and defense was propelling the nation in a new direction. But the story didn't begin with the high-tech boom, and it didn't end with its crash. Actually, it seemed to me that the story began earlier. What were the forces at play? Here was a young immigrant nation, poor in every conceivable measure and surrounded by hostile neighbors. Yet, it had a deep and rich heritage of innovation. If Israel, under siege, could create world-class universities and research institutions and breakthroughs in the fields of medicine and science and technology, might there be lessons for the rest of us? After all, in a 2004 Forbes magazine survey of the world's leading companies, broken down by region, the Middle East had nine- eight were Israeli. I was intrigued, and I found that there was a deeper and broader story to be told about this incongruous nation of innovators. A significant place to begin was with the military, which repeatedly led me to unit 8200. How did it come to pass that an intelligence unit sitting smack dab inside a military infrastructure turned out to be one of the nation's most distinctive schools for entrepreneurs and an incubator for innovative ideas? As the saying goes, business is like war, and in Israel, the unique intersection of surviving in a hostile region and the unrelenting pressure to innovate to defend itself had broader implications. As it turns out, espionage, counterterrorism, and defense had very real business lessons. It was worth examining this connection because innovation is one of the most important parts of business, and here it was found in a military structure. This was not an easy subject to cover. For one, although unit 8200 has been mentioned more publicly in recent years, it remains, for the most part, classified. For years it was forbidden to talk about the unit, and the time it had spent in total secrecy continues to cast a pall over its public image. Although the high-tech boom cracked open the wall of silence that had surrounded this unit for decades, many of its former members remain reluctant to discuss their time in its service. One former soldier told me that one of the reasons so many unit alumni ended up working together after leaving the unit was simply because nobody could talk about what they did there to outsiders. There was a secret language among soldiers, and a resume was not part of it. To research this topic in any detail required the trust of several former members of the unit, and I thank them for handing over their stories to me. The individual cases and stories or rather, what can be told are not meant to undermine state security, but rather are to illuminate the machinery, the cog behind the wheel. They are a metaphor for the way innovation has taken root in Israel through circumstance and history, and for a way of thinking and what it says about this place that continues to defy all odds and expectations. Since the subject was a sensitive one, I consulted with Israeli military authorities, and, as a result, some modifications to the manuscript were made. A number of my interviews took place at cafes, others at company offices and boardrooms, and not a few at army bases and the Kirya, the Israeli defense complex in central Tel Aviv. Many individuals requested that only their first names be used, and others asked not to be identified at all. For the purpose of clarification, in the latter case I have given these individuals an assumed name. However, whenever possible, I have identified individuals in full. I spent almost nine months in Israel in 2003 and the early part of 2004 researching open source documents and conducting interviews, nearly 100 of them in all, for this book. It was a surreal time. Suicide bombings continued apace, and Israeli military reprisals were a constant. War with Iraq loomed around the corner. I had my reporter's notebooks and a gas mask ready to go. A friend suggested that we time the sprint between my apartment and the nearest public bomb shelter, should Iraqi SCUDS start falling. Fortunately, they never came. However, in the midst of all the tension, there was a remarkable normalcy and vibrancy to daily life despite the fact that the economy had been decimated by the protracted and deadly conflict, and the gains made during the boom years had all but vanished. Israelis had already shifted gears to the new reality of life at war-again. I was struck time and again at how new ideas were taking shape-ideas that might become products and companies. It was astonishing how this nation refused to get mired in the difficulties of the time. Rather, it sloughed them off like old skin to start anew. The cafes and restaurants were full, and movie theaters and opera houses were packed. There was a fighting spirit that was palpable. Nobody surrendered to the distinct pressures and deficits that piled up each day. It became very clear to me that this was a place where the kinds of challenges and difficulties that would cause most to throw up their hands were perceived quite differently. They were viewed as challenges to be met head on, as opportunities to be uncovered through adversity. This is where innovation begins.

Spies, Inc.: Business Innovation from Israel's Masters of Espionage

The following ISBNs are associated with this title:

ISBN - 10: 0131420232

ISBN - 13: 9780131420236

Read from the Book

PrefaceI first came across unit 8200 when I wrote a magazine piece chronicling Israel's high-tech boom. It was 2000, and there was a cataclysmic buzz going on about this tiny, defiant nation that had in a very short period of time lept onto the global stage as one of the world's most dynamic technology clusters. At the time, Israeli startups numbered in the thousands, and the country placed third behind the United States and Canada in the number of companies listed on NASDAQ. There was something big going on inside of this small nation. Undeniably, the driving force behind much of this was the Israeli Defense Forces (IDF) and, in particular, its elite technological units. However, there was one that stood out—unit 8200—and although it had remained in the shadows for decades, it seemed to cast the strongest light over much of the dynamism that was happening in Israel.The IDF plays a wide-ranging and singularly exceptional role in Israel, but there was something fundamentally unique and interesting going on in this secretive intelligence unit that has been compared to the National Security Agency (NSA) in the United States. While the list of world-class technologies and companies that could trace their lineage to the unit was certainly remarkable in its own right, it appeared to be just a small thread that was part of a longer string. Israel's particular set of geopolitical and historical circumstances had shaped a very distinctive kind of innovative thinking. The military was

From the Publisher

Spies, Inc.: Preface Preface I first came across unit 8200 when I wrote a magazine piece chronicling Israel's high-tech boom. It was 2000, and there was a cataclysmic buzz going on about this tiny, defiant nation that had in a very short period of time lept onto the global stage as one of the world's most dynamic technology clusters. At the time, Israeli startups numbered in the thousands, and the country placed third behind the United States and Canada in the number of companies listed on NASDAQ. There was something big going on inside of this small nation. Undeniably, the driving force behind much of this was the Israeli Defense Forces IDF and, in particular, its elite technological units. However, there was one that stood out-unit 8200-and although it had remained in the shadows for decades, it seemed to cast the strongest light over much of the dynamism that was happening in Israel. The IDF plays a wide-ranging and singularly exceptional role in Israel, but there was something fundamentally unique and interesting going on in this secretive intelligence unit that has been compared to the National Security Agency NSA in the United States. While the list of world-class technologies and companies that could trace their lineage to the unit was certainly remarkable in its own right, it appeared to be just a small thread that was part of a longer string. Israel's particular set of geopolitical and historical circumstances had shaped a very distinctive kind of innovative thinking. The military was its most evident expression, and unit 8200 proved to be its most explicit example. This creative entrepreneurial character that had served Israel so well in war and defense was propelling the nation in a new direction. But the story didn't begin with the high-tech boom, and it didn't end with its crash. Actually, it seemed to me that the story began earlier. What were the forces at play? Here was a young immigrant nation, poor in every conceivable measure and surrounded by hostile neighbors. Yet, it had a deep and rich heritage of innovation. If Israel, under siege, could create world-class universities and research institutions and breakthroughs in the fields of medicine and science and technology, might there be lessons for the rest of us? After all, in a 2004 Forbes magazine survey of the world's leading companies, broken down by region, the Middle East had nine- eight were Israeli. I was intrigued, and I found that there was a deeper and broader story to be told about this incongruous nation of innovators. A significant place to begin was with the military, which repeatedly led me to unit 8200. How did it come to pass that an intelligence unit sitting smack dab inside a military infrastructure turned out to be one of the nation's most distinctive schools for entrepreneurs and an incubator for innovative ideas? As the saying goes, business is like war, and in Israel, the unique intersection of surviving in a hostile region and the unrelenting pressure to innovate to defend itself had broader implications. As it turns out, espionage, counterterrorism, and defense had very real business lessons. It was worth examining this connection because innovation is one of the most important parts of business, and here it was found in a military structure. This was not an easy subject to cover. For one, although unit 8200 has been mentioned more publicly in recent years, it remains, for the most part, classified. For years it was forbidden to talk about the unit, and the time it had spent in total secrecy continues to cast a pall over its public image. Although the high-tech boom cracked open the wall of silence that had surrounded this unit for decades, many of its former members remain reluctant to discuss their time in its service. One former soldier told me that one of the reasons so many unit alumni ended up working together after leaving the unit was simply because nobody could talk about what they did there to outsiders. There was a secret language among soldiers, and a resume was not part of it. To research this topic in any detail required the trust of several former members of the unit, and I thank them for handing over their stories to me. The individual cases and stories or rather, what can be told are not meant to undermine state security, but rather are to illuminate the machinery, the cog behind the wheel. They are a metaphor for the way innovation has taken root in Israel through circumstance and history, and for a way of thinking and what it says about this place that continues to defy all odds and expectations. Since the subject was a sensitive one, I consulted with Israeli military authorities, and, as a result, some modifications to the manuscript were made. A number of my interviews took place at cafes, others at company offices and boardrooms, and not a few at army bases and the Kirya, the Israeli defense complex in central Tel Aviv. Many individuals requested that only their first names be used, and others asked not to be identified at all. For the purpose of clarification, in the latter case I have given these individuals an assumed name. However, whenever possible, I have identified individuals in full. I spent almost nine months in Israel in 2003 and the early part of 2004 researching open source documents and conducting interviews, nearly 100 of them in all, for this book. It was a surreal time. Suicide bombings continued apace, and Israeli military reprisals were a constant. War with Iraq loomed around the corner. I had my reporter's notebooks and a gas mask ready to go. A friend suggested that we time the sprint between my apartment and the nearest public bomb shelter, should Iraqi SCUDS start falling. Fortunately, they never came. However, in the midst of all the tension, there was a remarkable normalcy and vibrancy to daily life despite the fact that the economy had been decimated by the protracted and deadly conflict, and the gains made during the boom years had all but vanished. Israelis had already shifted gears to the new reality of life at war-again. I was struck time and again at how new ideas were taking shape-ideas that might become products and companies. It was astonishing how this nation refused to get mired in the difficulties of the time. Rather, it sloughed them off like old skin to start anew. The cafes and restaurants were full, and movie theaters and opera houses were packed. There was a fighting spirit that was palpable. Nobody surrendered to the distinct pressures and deficits that piled up each day. It became very clear to me that this was a place where the kinds of challenges and difficulties that would cause most to throw up their hands were perceived quite differently. They were viewed as challenges to be met head on, as opportunities to be uncovered through adversity. This is where innovation begins.

From the Jacket

When you're outgunned, when you're outnumbered 100 to 1, you have two choices: innovate and improvise. Or die.

Spies, Inc. is a lesson in entrepreneurship on the fly: succeeding when resources are scarce and failure is not an option.

" Stacy Perman tells a mystery never told beforethe story of the marriage of technological innovation and spycraft. It is this marriage that has made Israeli intelligence so distinctively unique, and it is written like a real thriller."

AVNER COHEN, AUTHOR OF ISRAEL AND THE BOMB

" Stacy Perman has done some first-rate research, uncovering and explaining the significant nexus between Israel's military intelligence efforts and the high-tech innovation that has become a hallmark of the Israeli economy. There are valuable business lessons to be learned throughout these pages for organizationsbe they companies or countrieshoping to build a high-tech base for their economies. Above all, there is superb drama in Spies, Inc. and plenty of insight into the inner workings of an engine for innovation."

 ROBERT SLATER, AUTHOR OF MICROSOFT REBOOTED: HOW BILL GATES AND STEVE BALLMER REINVENTED THEIR COMPANY AND JACK WELCH & THE G.E. WAY: MANAGEMENT INSIGHTS AND LEADERSHIP SECRETS OF THE LEGENDARY CEO

" Spies, Inc. is both a compelling tale of high-tech espionage and an insightful business manual for the twenty-first century. As Stacy Perman chronicles the derring-do of a band of Israeli intelligence operatives, she shows how the country's fight for survival has forced it to think and act with brash creativity both on and off the battlefield."

 JOSHUA HAMMER, JERUSALEM BUREAU CHIEF, NEWSWEEK, AND AUTHOR OF A SEASON IN BETHLEHEM: UNHOLY WAR IN A SACRED PLACE

In Spies, Inc. former Time and Business 2.0 writer Stacy Perman reveals the spellbinding story of the Israeli military and 8200, the ultra-secret high-tech intelligence unit whose alumni helped create a number of the groundbreaking technologies behind today's information revolution. An incredible tale in its own right, 8200 is also a remarkable case study in innovation, offering compelling lessons for every business.

Likened to the NSA in the U.S., 8200 was established to capture, decipher, and analyze enemy transmissions. But unlike the NSA, 8200 did not have an endless font of resources at its disposal...and, due to secrecy, it couldn't generally buy "off-the-shelf" as a matter of procedure. Instead, it invented and customized many of its own technologies around the unique challenges of a nation that exists on a constant war-footing.

Along the way, its soldiers learned to come up with breakthroughs under crushing pressure and challenges. They brought this same sense of purpose under fire and creative improvisation in creating complex systems to the civilian world where they created top-line technology companies in a number of areas, including wireless communications and security.

Whispers of these secret Israeli electronic warriors swept venture capital circles in the 1990s, as a stunning number of Israeli tech startups bore fruit...many founded by 8200 veterans. Now, Stacy Perman tells this incredible story...revealing the techniques of entrepreneurship on the fly, when failure is not an option.

Read it as a spy story. Read it as a history story. Read it as a business story. However you read it, you won't be able to put it down.

An ingathering of geniuses

Organizing to win based on cunning and intellectnot pure force

Connecting the dots: details, knowledge, and imagination

The role of brilliant intelligence: from counterespionage to entrepreneurship

Pure innovation, relentless improvisation

Doing the impossibleon a shoestring budget

"Are you from the unit?"

How venture capitalists discovered one of the world's top sources of innovation

About the Author

About the Author

Stacy Perman, a journalist, is a former writer with Time magazine and Business 2.0. Her work has appeared in many publications including The Wall Street Journal, Inc. magazine, Los Angeles magazine, and Sports Illustrated Woman. She is the recipient of the Robert Bosch Foundation fellowship in Germany, a JAPUS Foundation fellowship in Japan, and a grant from UCLA's Center for International and Strategic Affairs.

In the course of researching this book, she canvassed Israel, interviewing current and former military and intelligence officers, soldiers, entrepreneurs, academics, members of industry, and even a former prime minister to capture the story of Spies, Inc.